Responding to population ageing is among the great policy challenges facing the society in the 21st century, along with global climate change and growing social & economic inequality.
NZCCSS invited international social policy expert Dr Satya Brink to put New Zealand’s response to population ageing into comparison with other wealthy countries so that we can assess how well we are doing in meeting the challenges and opportunities population ageing.
Dr Brink has compared NZ with four other wealthy countries – Sweden, Japan, Australia and Canada – that are a mix of similar (Australia, Canada) and different (Japan, Sweden) in culture and social policy to New Zealand. She looked at six main policy areas: income and pension policy, health, housing, long term care, employment, and education.
Overall conclusion – Is NZ a Good Place to Age? Yes, but…
New Zealand ranks in the top handful of countries for overall wellbeing of older people according to robust international comparisons. Among the strengths identified of high rates of tertiary education and high rates of employment among older people there a several points of vulnerability. These vulnerabilities include: future income security in pension policy, high rates of obesity, declining home ownership rates, and a relatively high proportion of the population receiving long term care.
New Zealand has a faster rate of population ageing than the other countries in the study and the window of opportunity for policy reform is closing as population ageing gathers pace.
A key policy challenge that wealthy, developed countries face is managing the trade-off between fiscal sustainability of public policies and income adequacy for older people. Future policy must focus on a balanced “made in NZ” approach that does not pit private against public and generation against generation.
Comparing a range of policy areas emphasises the need for New Zealand to adopt a whole of government approach to its response to population ageing. A “policy evaluation office” that would examine policy successes in relation to objectives around population ageing would help ensure that the policy focus on maintaining and building overall wellbeing is given a high priority as our population ages.
Income and Pension Policy
New Zealand, along with Sweden, has a significantly higher proportion of public transfers as sources for income in older age than the other countries in the study. This shows the relative importance of NZ Super in maintaining incomes for older people in NZ.
- Surprising weaknesses are identified in international comparison mean that future income security for older people in NZ is under pressure. A comparatively higher old age poverty rate (which is very dependent on the choice of poverty measure), comparatively lower relative welfare with the rest of the population and relatively low GDP per capita are the basis for this assessment.
- There is a sharp decline in incomes for older people over 75 years in NZ compared to the other countries in the study, which might be because of the high labour force participation in the ages 65-75 yrs. once people stop working their earnings decline rapidly because of a comparative lack of capital and savings.
Health expenditure as a share of GDP and its growth rate are both comparatively high in NZ. The challenge is to control this growth that is driven mainly by “residual costs” (technology, prices, institutions), rather than demographic and demand growth.
- Out of pocket expenses are something that NZ does well at containing, mainly through containing pharmaceutical costs. We have the lowest rate of out of pocket expenses of the five countries looked at.
- NZ has a real problem with obesity among older people, with a much higher rate than Canada, Sweden or Japan.
- Rationing delays for elective surgery are increasing (hip replacements) 2006 – 2012.
While NZ shares overall high home ownership rates with the other countries, and home ownership rates for older cohorts are particularly high, the ownership rate is declining.
- Maori home ownership rates are much lower (43%) than the rest of the population.
- There is a lack of data about the supply of accessible housing. This is a major gap for a vital area of policy to support ageing in place.
Long Term Care
There is an enormous gap between projected growth in the need for long term care workers (3.2%) and actual labour force growth (0.6%) by 2025.
A doubling of overall long term care costs by 2050 is projected. Healthy ageing can have some impact in reducing growth in costs but most impact will be achieved through containment, productivity and efficiency gains.
NZ has the highest proportion of population receiving long term care either at home or in an institution among the five countries in this study and indeed has the 4th highest rate in the OECD.
New Zealand has the highest rate of employment among the countries compared in the study for those aged 65-69, but Japan has a higher rate of employment for those over 70.
- This increasing labour force participation will help offset costs of rising demand for NZ Super but “encore” careers are not always a positive experience as they typically have lower wages and many older people simply are no longer able to work.
- Similarly, life expectancy varies strongly across socio-economic status, with differences of up to 3 years between upper quintile and lower quintile neigbourhoods in Canada.
Lifelong learning plays a key role in helping older people to maintain income and wider well-being into advanced age.
- NZ has relatively age-friendly tertiary education policies than the other countries in the study, although the recent removal of access to student allowances for over 65s diminishes this advantage somewhat. NZ has the highest rate of completed tertiary education for people age over 70, despite having the lowest rates of completed secondary education for the same age group.
Download Dr Brink’s 2014 Conference presentation here:
Is NZ A Good Place To Age (Satya Brink)